19.4%. >> 19.4%? that's exactly what we were talking about, the fact we've not had a correction, a 10% drop, in over two years. >> unbelievable. the dow is up 45. let's get back to headquarters, scott wapner and "the halftime." carl, thank you so much. welcome to "the halftime" show. four hours to go until the close. let's go to the wall and see where we stand on the street at the lunch hour. dow up 45. s&p, nasdaq in the green as well. here's what we're following on "the half." microsoft's move. what does a big dividend hike and buyback mean for the rest of big tech? who could be next to pay up? special delivery. after a 20% run, should you buy or fade fedex? ahead, a street fight handled with care is ahead. first, the top story. it is crunch time for the rally. stocks are up again today on pace for their best september in three years. but it all comes down to this.

a fed meeting that could change everything. so will mr. bernanke taper? if so, by how much? and what does all of it mean to your money? we trade it with josh brown, joe, simon, john. joe terranova, to you first. >> well, i think tomorrow, really, the expectation is you will see tapering. we've been consistent on that all along. i think what they do with the outcome-based guidance, that's what the market is most going to pay attention to. i've said, i believe, the unemployment 6.5%, down to 6%, it gives them another ten months to lengthen the runway on the entire tapering process. i think for the investment, for the trade, it really comes down at this point to where you want to be allocated. now, e.m. has been good. materials have been good over the last six weeks. i, myself, believe this is the time that you want to begin the rotation. go back to the financial names. go back to the industrial names. move out of the materials, move out of e.m., because i think after we get tapering tomorrow, that's going to be the positive effect. >> josh, we haven't had a real correction all year long.

we now have the best three quarters -- the best first three quarters of the year since 1997. >> yeah. >> is it all going to stop tomorrow? >> no. >> is this the end of the rally? does it keep going? >> so here's the way i'm thinking about this. the thing that tells me this is going to be looked at as a "buy the news" type of scenario most likely, unless the fed really shocks the market -- but if the fed does something within the range of what's consensus right now, and maybe throws a bone to the housing market by possibly upping the mbs, even as they reduce treasury purchases, if that even is on the table, we really don't know, but i think the market right now is acting as though they want to buy the news. look at the two top performing sectors over the last 30 days. tech up 4.6%. industrial goods up about 4.8%. this is a pro-cyclical thing happening right now. i think there could be some confidence after an initial sell -- you know, a kind of knee-jerk down. i wouldn't be surprised if the market says, "hey, wait a minute, the narrative is changing, there's a tailwind

behind the global economy, let's treat it as a buy the news event." >> we'll get everybody involved in a moment. i want to bring in steve liesman, senior economics reporter. i saw you shaking your head sort of -- >> not while i was talking, was he? >> yeah, it was. >> i'm going home. >> josh raises an interesting point. so what should we really expect for tomorrow? >> okay. i think josh is close, but i was just having a minor problem with what you were saying. >> okay. >> we can exaggerate for television if you like. >> please. >> what we're talking about is the mix of the taper. >> yeah. >> it's a really good point you make. i don't think they go positive. i think what they do is they reduce treasuries more than they do mbs. >> right. >> that's what i would look for tomorrow. the numbers that come out, we'll get a total, which will be, like, it's $85 billion. >> right. >> and it'll be somewhat less. the split is what we're looking for. i want to show you what the cnbc survey shows about what to expect tomorrow. what the average is. we'll get more detailed than usual here, because what you'll see is the taper amount is seen

as about 14.5 billion. that's kind of high. but it is interesting because it's up from a little bit when we went to the field after the jobs report in september, when it came down. you see it's come down, the average expected taper amount. it is expected by 48% to happen this month. the fed is seen as maintaining the taper for about three and a half months at the new level. so not successive ones according to our market here. and the qe is seen ending august 2014. let me go on to two more quick charts, scott. the taper. is it priced in? that's the question mark. 80% -- no, what is that one there? the taper amount? i can't see it. oh, okay. that's what i wanted to show you here. 53% of the markets say it will be a $10 billion and the rest are higher. so that's where the pluralities -- >> here's why the mbs split matters. 40% of the growth was housing-related. this is clearly the most important support for the economy, from housing.

if they want to yank the carpet out from under that whole cohort, that's a really bad idea. if they can keep mbs solid and reduce treasuries, i think the market will buy that announcement. >> steve, i mean, people are talking about the 16 dots, and this could be the one big davie downer, what's bernanke saying about the outlook in 2016, or if fed funds are over 2.5%, to josh's point, having an impact on the housing, et cetera. he'll be looking at his comments, it's the first time we'll see his comments -- >> the important story, we should recap, the forecast will be for '16. it will be weird that far out. they'll show a funds rate that will be below normal while the growth numbers are supposed to come back. >> yeah. >> and i think he has to find a way to finesse that. maybe they'll announce changes how to how they do it. you could argue, i suppose, simon, at the end of the day, we'll have a lower than expected funds rate, because we expect slack in the economy. >> dr. j, what will make you happy tomorrow? and how would you be trading it?

i think everybody at this point expects some level of tapering. no taper at all is going to be a shocker. and it could go either way. it would seem to be a positive for some, though others will y say, geez, if they're not tapering at all, they must be really worried about where we stand on the economy right now. where do you want to see? >> i think what steve and what josh have talked about start the mbs, the mortgage backed securities, i think that is where they are not likely to touch. that's more or less the third rail right here, scott. so i think they stay away from that, and they pull back that $10 billion or so that steve says the majority of economists are looking for. i think that does, indeed, happen in the bonds. if it plays out that way, scott, then i think it'll be very positive. if they choose to go equal amounts or even flip it the other way and go -- let's try to cool off the housing sector, which i don't believe they would do at all, that would be an outlier. i don't believe they would make

that move, like i say, that's the third rail. >> dr. j, we had a chart up that showed our survey respondenters think that more of the taper is priced into mortgages and treasuries than it is in equities. is that your take? is there still movement to come from the announcement tomorrow in equities, at least more than what happened in treasuries and mortgages? >> i think you could still see more there, steven. again, if we get that 50/50 cut. if it's, for instance, 5 to 7 billion out of each of those, mortgage-backs as well as government bonds, i think that would be a very large negative, which is not priced into the market. >> and i need to respond, dr. j, which is the fed of all things likes least being in the mortgage business. that they -- >> i agree. >> -- want their portfolio back. what you're saying is the market wants the fed in the portfolio business and it would be a negative to be selling off in equal amounts as treasuries? >> yes. at least at this stage, steven, and in the first move here with the taper, i think that would be extremely negative if they did that. >> well, all i'm -- they touch mortgage securities tomorrow, the morkt's going straight down.

>> yeah. >> the market doesn't expect that. >> i expect them to touch it. our split in our survey shows about 70/20. 80/20 is where they expect the split to be. 80% of the taper comes in treasuries, 20% comes in mortgages -- >> -- fallen off the cliffs -- >> so would you be afraid to buy anything housing related today ahead of what could happen tomorrow? >> i don't think -- >> would you buy a financial stock today? >> i wouldn't sell a financial. i can't imagine why anyone would be making a big commitment to the banks ahead of this news. it's not like they haven't already rallied. i'm not sure how much more you'd expect out of that cohort. >> well, at the top of the show, rotate into financials. yeah, this is the time. financials have underperformed over the last six to eight weeks. >> i say no rush. >> -- up on that, because right now we're in a situation where the cost of funds for the banks has not been changed. right? the fed funds rate is still whatever it is, under 20 basis points. but the amount they can get on a

loan has gone up. so their spread has widened. is that reflected in earnings? reflected in expectations for earnings yet? >> it quickens the path to normalized earnings. >> we'll see what happens, steve. we know you'll be down there, asking questions of the fed chairman. we'll be watching for that. steve liesman. let's bring in the next guest who says the rally hainges on what the fed does. professor, welcome back. >> thank you. >> what are your expectations? how do you think the market will react? >> right. let me tell you my -- actually, i think the division between the treasuries and the mbs is not that important. i actually think the most important thing -- and what the market is going to be looking on -- is some sort of change in outlook-based criteria for easing. i do think -- i mean, 10 billion would be a good number. 15 would be acceptable. if they did something on the outcome base. i do not think they'll lower the unemployment rate.

there's a small chance they're going to put in that inflation lower bound. personally, i think what they're going to do is reiterate what they said last december, and that is that, you know, the unemployment rate is just one of many indicators that will be looking at this. not an automatic trigger. so they will remind the market of that. but i don't think we're going to get any change in that. so i think there'll be a little disappointment at 2:00 on that announcement. but, you know, as long as it's 10 to 15, i think the market will accept it and move higher. we're .5% below the all-time highs in the s&p 500 and the russell 2000 and the dow industrials. they're all hovering there waiting for the uncertainty to clear up a little bit before moving higher. >> so you may get a little bit of an initial -- maybe not a full-fledged tantrum, but some,

you know, crying in the corner -- >> yeah, i think -- now, if they do -- if they do lower -- if they do 10 billion and they do say we're going to lower, you know, to 6% or something, wow, that's -- that's going to be a huge surge upward. i just don't think they're going to change that criteria as much. if they don't mention any criteria at all, there's going to be some disappointment. because as we know, one of the conundrums for the fed is that the unemployment rate is moving down while all of the other labor market indicators are not looking so good. >> it sounds like -- >> -- you want acknowledgement by the fed that that's something they'll look at. >> it sounds like net-net, though, it's a "buy on the news" event. >> i think net-net it will be, even though i can see them being a little disdisappointed, on th first announcement, if they don't see the outcome base. i think the net, that uncertainty out of the way, you know, and i think the tide is coming in for yellen, which is favorable for the market.

that uncertainty is being resolved. syria's being resolved. the only thing left really is the debt ceiling. i mean, of all of the uncertainties that have been accumulating over the last month, you know, they're seeing the slow resolutions, which is positive for equities. >> jeremy, it's josh brown. so i wanted to -- >> yeah, josh? >> -- i wanted to talk about where a lot of people would say, well, look at where interest rates are, and let's figure out the earnings yield and come up with a way that stocks are still cheap, and i know that various people take issue with that methodology, they argue there is no such thing as earnings yield. but at what point would rates have to go to where we say stocks are no longer cheap based on that metric? because i know a lot of money is run that way. >> well, i think a simple way to think about it is stocks -- you know, on current earnings -- are just about at their ash ranch. 15, 16. interest rates are still well below their average. so relative to interest rates,

the gap between stocks and bonds is still very, very large. what we economists call the equity premium. it's still very, very large. i mean, interest rates would have to go up an awful lot to get interest rates back to average. and when we see interest rates this low, p/e ratios have tended to be above 15, 16. 18 and 19. and that's why i think there's still some juice left in this market, because even though we're getting the interest rates moving up, they're still so low and the targets of what the fed and others are going to be below the average, and that means that stocks relative to bonds are still cheap, even though relative to history are about average. >> professor, thank you for joining us. i think it's fair to say maybe more measured but still very bullish. professor jeremy segal. we'll talk to you soon. >> thank you. coming up next on "the half," microsoft ups its

dividend by 22%. our traders will reveal who could be next in line. plus, with bernanke in the spotlight over the next couple of days, how should you be trading the bond market? well, our next guest, with more than 10 bill under management, has your playbook and we'll give it to you next. in today's markets, a lot can happen in a second. with fidelity's guaranteed one-second trade execution, we route your order to up to 75 market centers to look for the best possible price -- maybe even better than you expected. it's all part of our goal to execute your trade in one second. i'm derrick chan of fidelity investments. our one-second trade execution is one more innovative reason serious investors are choosing fidelity. now get 200 free trades when you open an account.

welcome back to "the halftime report." when you see a $40 billion hedge fund, you have to take notice.

that's what microsoft generated this morning. it announced it will install a new $40 billion buyback plan, replacing the old plan. the company's board also authorized a 22% boost to the dividend to 28 cents a share. all of this happening just after microsoft announced the purchase of nokia's smartphone business, and just before microsoft holds an investor meeting on thursday. you can probably imagine, scott, what kinds of questions those executives will get at the meeting. >> not to mention, dom, just after ballmer says that he's retiring within a year. so, guys, the traders, the timing. doc? our resident microsoft watcher. the timing's interesting. the news is interesting. microsoft's becoming apparently a more shareholder-friendly company with value act in the game. what's it all mean? >> well, and, judge, i'll bet you if we were to talk to candidates for the position, to take over and fill ballmer's shoes, i'd bet they'd wish they could have made this announcement rather than having

it made prior to them stepping into those shoes. so while this is interesting, they already had a $40 billion buyback on the table, judge, due to expire at the end of the month. they hadn't been terribly aggressive with that buyback, although had they done that, they would have been buying it in the low 20s over the last 24 months. i don't know that this is a huge deal for microsoft, but i do think value act, you're exactly spot on, judge, that value act is behind -- or other, perhaps, activist investors -- are behind exactly what microsoft is doing right now. >> maybe it means more, simon, as to who could be next within the big tech universe to raise the dividend? >> yeah, i think microsoft, sort of a sideshow, right? nasdaq has been exploding here recently. i think they really want to be a part of the technology and move -- so many of the companies have great balance sheets and trying to do something with it. tdiv is an etf that invests

purely in large-cap technology stocks. it was more and more of the companies historically haven't played out, it's a great way to play the cyclical names. >> what about apple? >> that's exactly where i'm going on this. when you hear the news this morning about what microsoft is doing and you think about the price performance in technology, specifically apple over the last week -- now, carl's going to meet at some point with tim cook. we don't know when that dinner will be. we assume it will be relatively soon. for apple not to have in place some sort of contingency plan to treat -- if there is another leg lower in the stock price -- to counter that with a large buyback, to counter that with a one-time large dividend, would be incredibly foolish. apple comes to mind here. they need to do something and have that contingency in the back pocket if we see a further decline in the stock market. you can't ignore what -- >> are we talking now about a company that will have to resort to financial engineering -- >> yes. >> -- more than anything -- >> yes. >> -- because no one is head

over heels over their products? >> what else will they resort to at this point? >> what about an acquisition, something strategically to get them in a space they need to -- >> well -- >> the question was what can they do about apple -- >> apple historically has not made big acquisitions. >> i know they haven't, but a new ceo at the helm, the one is what can they do with cash. one is a dividend. >> can i answer? >> so the acknowledgement becomes that the organic growth that apple has specialized in for years, the innovation that apple has specialized in for years, go out and make a large acquisition, they are now coming and saying, we've got to go out and buy the growth for the very first time in the business model. >> the company has to go through the maturity session. you have $50 billion in cash. they can't revolutionary. they're evolutionary. and the way to grow that is through acquisitions. orable has been historic about

that in the acquisitions and maybe it's time for apple to start up and grow up and do it. cramer has talked about them buying twitter 12 months ago. it would have been a great guy. real forward-thinking acquisitions, maybe the way to spend the money. it's a way to keep shareholders happy. >> josh, quickly. >> i think historically, apple, microsoft, looking at the companies doing huge buybacks, back to '06, '07, none of them has seen the market cap grow in excess of how many shares they -- of how many dollars they bought back in stock, which tells you that, frankly, it just doesn't really work that well. so i agree, they should be focused on innovation. the microsoft news is puszling. i'm not sure why you'd be conducting a ceo search and then distributing cash. how do you know what the incoming management team is going to want to do? so i really don't get it. i think what they're doing is maybe buying themselves time to continue that search longer, because maybe it's not as fruitful as, you know, they'd hoped it would be. >> dr. j, weigh in on apple here. >> apple, judge, i think that

we're all going to be surprised. number one, i'll be surprised if the stock is lower than any lows we saw yesterday. number two, the 64-bit system, judge, on the a7 chip, i don't think people have a real understanding for how much faster that is. that's groundbreaking. i will grant you that the photography gimmicks that they put through, the slow-motion photography and the multiframe shooting, that's not really the reason to upgrade. a much faster smartphone, it's a reason to upgrade. until we have one in our hands, judge, which will be friday, then we won't know. but i believe -- >> well, you know, part of me says you better come to the house with something better than a faster chip if you want to sell a lot of new phones and if you are apple. right? if you don't have the hardware -- >> think about -- >> if the hardware isn't -- >> think about how many folks, judge, are still in the 4 and the 4s. those are the people that are shocked when they go up to the 5. now, if those same people are going up to the 5s, i think that

is going to be just a shockingly faster device for them, and that's what i'm talking about. >> i think they're going to sell a ton of phones. i've been in a few verizon stores over the last week. i myself am going to upgrade on friday. every one of the guys is saying this will be way bigger than the last launch, which was kind of underwhelming. so i think this is going to actually be a catalyst for the name. >> all right. let's move. the market's going to be focused on the fed decision tomorrow, and what it means for bond yields. let's bring in heather loomis, director of fixed income at jpmorgan private bank. joining us live from houston. welcome to the show, heather. >> thank you so much. >> what will happen tomorrow? end of day, where will the 10-year yield going to be? >> it really -- it really depends on what they announce. >> i know, i know, that's why i'm asking you. i want to know what they'll announce. of course, it matters what they'll announce. >> so our expectation is that they're going to come in about a reduction of about $10 billion worth of treasuries and about $5 billion worth of mortgage

securities. and if they come in right at that line, we actually think that there could be a relief rally to the tune of about 5 to 10 maybe basis points on that. >> we've been trying to gauge the -- especially in the bond market -- as to whether the taper is priced in at this point. and there still seems to be a real difference of opinion as to whether that's the case. >> right. no, i think that from what we've been hearing, from surveying -- from surveying our clients, hedge fund communities, it seems like the market is coalescing around this $15 billion number. but it's yet to be seen. we've never -- we've never had an opportunity to witness this before in markets with, you know, a noneconomic buyer at play, in markets as large as they have been. and so, it's hard to tell how much of it is priced in. but i think at this point, the market does -- has probably internalized the fact that the data set is getting better in

the u.s. to a large, tent internationally, and the direction for rates has to be up from here. >> and a quick question. it seems to be a little disagreement, mr. siegle, very brave, very smart, doesn't seem the mixture will be important. here on the desk, we think it will be very important, considering with what's going on with the housing market recently. is that something you're looking towards? >> yeah, i think -- you know, i think that the market is going to be looking at the mix and at the margin, a reduction in treasuries i think will be perceived a bit better than a more meaningful reduction in mortgages. so i think it's important. you know, but the exact mix, whether it's, you know, whether it's 75% treasuries, 50%, i'm not sure how much that's going to matter. i think they want to see a mixture and not just one or the other. >> heather, it's joe. so last week we had the verizon deal, and it seems as though the high-yield market seems to get some interest back again. i don't know if investment grade is a place i would go, given

your rate forecast and what i expect. look at municipal bonds right now. given the valuation, seeing what we've done over the last couple of months, do you think it's a good point of entry? >> oh, yeah. i mean, the municipal bond market, for the first time -- and i've been working with clients on this for a very long period of time. over the course of the past y r year, it's been very hard to get excited about some of the yields in the municipal bond market. but if you look at it today, especially in the long end of the municipal bond market, you're actually looking at picking up on a taxable equivalent basis, triple-a muni bonds, outyielding single-a corporate bonds, it's pretty compelling. even for the absolute buyer who's just looking to lock in a high-quality credit at a good taxable equivalent yield, you're looking at yields around 5%-ish in that long-end range, which is good. and then, i think when you couple that with the fact that we have light supply, we just last week saw the lowest supply that we've seen in the bond

market, in this time period, since september of 2008, you know, and you're looking at a tremendous amount of outflows. in fact, the outflows have been year-to-date the largest we've seen since 1992. you're creating a mixture where it's actually looking attractive to take a bite of munys today, certainly if you're looking for a high-quality, negatively correlated piece of your portfolio to add to. >> yeah, heather, thank you so much. >> you're welcome. >> we'll talk to you soon, heather loomis, again with jpmorgan private bank. the biggest pops and drops in midday trading. first up, simon. >> the teen stocks have been crushed of late. this was down 43% before yesterday, but news out today, activist humming bird took an 8% interest, and now they believe they'll try to take it public going forward. >> joe, pot ash. >> volumes down in q3. more than we expected, just a couple of months ago. pricing lower, as well. i don't like the space right here. i would, however, look at two names.

bungy and dar. >> josh, take two. >> so this is a stock that's run up 30% since july. everyone was really excited about the new grand theft auto game. but a lot of times the things get priced in way early. and today, you're seeing a sell the news reaction, sell the event reaction. it's down on huge volume after a big run. i think there are other things you could be doing better than take two here. >> finally, doc, conagriculture. >> yeah gets a downgrade here, judge. quite frankly, if they take it much further than this approximately 1% sell-off, i like it, because i think it's made about an 8%, 9% correction over the last month. down here at the levels, or just beneath here, i like it. >> all right. coming up, the airlines taking flight. delta is hitting an all-time high on an upgrade from the street. but after a major run already, is the analyst too late? we'll give you the trade. that's coming up. plus, gold has fallen nearly 4% over the past week. will the fomc meeting give the

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we're making the turn. welcome back to the "halftime show." general motors looking to drum up an electric car to challenge who else but tesla. >> 200 miles, 30k is the price, only charge it once. the problem is the battery cost is too high. so for those of you looking at tesla today and wondering why it's up, that's the reason. the car is not in the here-and-now. for gm, you still own gm. fundamentally strong. technically strong. that's a good auto trade. >> all right, josh, pandora with a secondary stock up 2.3%. >> i've been bullish on this stock forever. i love the action today. they're going to do 14 million shares secondary. 4 million of which are coming from selling shareholders. they'll get the proceeds on the

other ten. they tried to sell this thing off, down 3% in the premarket. guess what? the buyers don't care. they came and the stock is higher. i think this company's got years of growth ahead of it. >> that's why i was going to ask you. it's somewhat odd on the announcement of a secondary to see a stock up the way it is now. >> scott, the most bullish you could see. think about the tesla secondary. they tried to sell it on that news. the buyers said, wait a minute, look how much cash they raised. they came in and bought. they're getting the benefit of the doubt like great growth companies do. where they're saying, look, management is raising additional capital to grow the business. they like the news. they don't dislike it. if you're an investor, that's exactly the reaction that you want to see. >> let's talk airline stocks. delta, u.s. airways, both getting a boost from an upgrade. that's over at jpmorgan. there's delta. you can see it's basically flat. but u.s. airways is getting a nice lift there, dr. j. >> and, yeah, it has more ramp, if you will, pardon the pun. i believe you'll see u.s. airways and american airlines merger happen. we already know that the justice

has decided to hear this case in november, rather than what people had -- or the people that had opposed it wanted it to be heard in perhaps march of next year. i think the merger happening is part of what's behind the delta upgrade, as well, because i do believe that's going to happ happen -- the merger between u.s. air and american -- i think that's good for delta, as well, and i think it's a less volatile issue. but like i say, less upside than the lcc play. >> all right. it's not just stocks and bonds hanging on the fed decision. gold traders are also anxiously awaiting tomorrow's big news. for more on that, let's go to mandy drury at the futures desk. >> it's been a rough month for gold so far, right? the metal is down about 6% in september. so jeff killberg, a tapering expectations to blame for the recent decline, and could a fed surprise actually save the gold trade? >> well, mandy, i don't think the fed is to blame. the tapering talks, why gold had

such a rough week last week, down 5%. i think it has to do with the equity market. they recovered nicely, the safehaven trade got pushed to the sideline. the reason why i think the fed can help bounce gold, why gold is going higher, is due to the fact that larry summers is now on the sidelines. so a counterintuitive trade, mandy. due to the fact that bernanke has the ability to taper more, close to 20 billion, you should see equities pull back, because it's the beginning of the end, and once again, we will see gold act as a safe haven trade. >> a little counterintuitive there, okay. what about you, griz? if the fed does taper, where do you think gold is headed? >> well, now, jeff hit the nail on the head. if we taper at 20, 25 billion, that's a shock to the market. i think that gold could go higher, because equities will get hit off that, because investors aren't expecting it. 10 to 15 billion, yes, they are. the numbers i'm looking at, as far as support and resistant, 1,305 in gold, down to 1,295, i

know a big range, but there's solid support there. if we happen to get the $25 billion and gold starts to pop, i'm looking at 1,335 in the upside as the first resistance. >> and that's just a teaser, because we'll have lots more on gold in our live show. we'll also find out what peter schiff thinks, the eternal gold bug, if the fed does taper what does he think gold is going to do. you can find out at 1:00 p.m. on futures now. make a date in your diary. >> we will. before we go, hey, killberg, we'll have a little impromptu debate, because josh brown was shaking his head when you were speaking. let's -- >> okay, j.b. >> he's stronger than me. he's an ex-football player. why do you have to tell him i was shaking my head. >> because, let's have a debate. >> killberg, what i think, we've retraced half of the bounce, so it's faltering off of the lows from the summer. frankly, if there's no taper, that would be the most bullish

thing for gold, but no one is expecting it. let's say we have the taper as is, no longer talking about summers, already taken him out out of the equation. if year looking at yellen, extremely dovish, but the fed is in exit mode, why would that be positive for something that's supposed to be an inflation hedge in name only? >> so that's my argument, j.b., and the fact that bernanke can actually do 20 billion on the higher end of the consensus ratio. we will see this due to the fact that he does have yellen coming in. much more dovish. we'll see qe in duration. therefore, you have to buy gold, because equities are not going to like this. remember, bernanke has a huge amount of padding on the tarmac in the equities sector. >> i love you. i'm on the exact opposite side of the trade. i would buy any weakness on equities and take any profit on gold you can after this announcement. >> don't make the world go around, right? we have a trade. >> thank you for playing ball. i'm an instigator, what can i say? we'll talk to you soon. coming up, will fedex

deliver on earnings? find out why one of our traders is pushing the sell button. plus, stocks are at all-time highs, so if you missed this rally, what do you do now? paul richards of ubs will break it down. farmers presents: fifteen seconds of smart.

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zillion. >> all right. welcome back. fedex is set to report earnings tomorrow before the opening bell. with only hours left to trade ahead of the big report, what's the winning play? let's debate it now. simon is the bull, josh brown the bear. 1:30 on the clock. make your case. >> well, you know, fedex has been a great one to beat up. really, longer-term it's a great play. it has a couple of benefits. first of all, global sourcing will increase. the emerging markets are looking stronger and stronger. plus e-commerce. the report of earnings next week, september 18th. i think they'll be fairly, fairly positive. a couple of things that we're

looking in the favorable numbers on the im -- pmi numbers receipt ently. again, really positive for the small package. over 9,000 customers they have over in canada, look to the u.s. in next week. looking into the transportation area, you're looking in terms of valuation, compared to u.p.s., it's much cheaper trading, 15 times versus 17 times. if you're looking at the stock technically, it's up 20% year to date. the relative strength continues to get higher. it has support level at 108. i think it's a good price target, 135. >> before all of the time is gone, let josh make his case. >> well, i would just -- i would just -- i would just say there's really no reason to own this name. the iyt looks outstanding. the index. it trades much less sloppy than this name does, which has a huge wide range between 90 and 110. u.p.s. is a much better buy, a 3% dividend. fedex yields nothing. frankly, it's just this giant global growth proxy that trades at a high beta, 1.25. so i'm not exactly sure what the

bull case is to own this when you can own the index and the index acts better. >> u.p.s. is a little more expensive in there. in terms of cutting costs, they cut $1.6 billion over the next two years. management is clearly focused on controlling the margins. the downside in this stock is already into it. >> one thing i want to mention, this has not been historically a good buy ahead of earnings. the last eight quarters, beat six times and stock down an average of 4%. management always gives ultraconservative growth. i would buy it after they report rather than buying it going into the numbers. >> and just one note, josh, i want to congratulate you on the signing up of the new firm. >> thank you, simon. >> i'll send you a fedex package. [ laughter ] >> thank you. >> sucking up to the guy to get votes. that's uncool. joe? >> yeah. >> who made the more compelling argument? >> a couple of things. simon mentioned the emerging markets. huh-uh. not happening. i will say that, where we are with fedex, it is fully valued. here's a company that needs to

increase the dividend. they've been focusing on cost cutting. it's time to increase the dividend. if they don't do it, then the value is full. >> all right. tell us who you think won that debate. tweet us @fastmoney, use #bull or #bear, and we'll give you the results at the end of the show. markets are rallying this week on the expectation that the fed is going to maintain its easy money policy, but does the market have it right? let's welcome paul richards, head of fx distribution north america at ubs. paul, welcome back. >> thanks, scott. >> we do expect there will be a taper tomorrow, correct? >> oh, we do. i think the market has nervous with the data. we see some saying 5 billion, and others saying 10, 15 billion, but you have to lower the economic projections. they'll move or they're not. this is a central bank that's credible and run by a credible individual. to my liking, they move tomorrow or do nothing at all. >> the market -- you think the market is getting it right, though? what's going to happen if the fed comes out and let's say it's

15 billion. just for argument's sake, it's 15. will the market like that? is risk going to be on? >> it will be about the composition. i think it will be 15. minimum. and i think that we have 5 billion mbs and 10 of treasuries. so something there. the key is economic projections. the market thinks that 15 will be accompanied by a lowering in the unemployment threshold from 6.5% to 6%, which i do not see. again, for the reasons of credibility. so, therefore, we have to look at chairman bernanke's press conference at 2:30. the ball's in his court. the guy's good. i actually wouldn't even react at 2:00 tomorrow, scott. i would do nothing until i hear this guy talk. >> so if you look at the risks that have been removed now and we take a look at where this market may be able to go after, you know, having -- getting off to a better than expected start to september than many had thought, summers gone. syria, off the front page. those are two net positives, certainly, for the rally, right? >> they are.

but i think the market missed the big one yesterday. nobody's talking about president obama's press conference yesterday. that was somebody -- just looking at his body language -- if you thought the debt ceiling debate was a bad one in q4 of last year, get ready for a bigger one, based on what he was saying yesterday. i wouldn't want to be mr. boehner walking into that oval office expecting a deal. the market gets through tomorrow, they'll get used to whatever the outcome of the fed is. come october, good luck. i think the debt ceiling could get very ugly, and as a result, i think s&p up 20% on the year, absolutely fine. bow ware of an october sell-off again. we've got a whole new reason to sell it, and i think it's washington. >> if nothing else, the rhetoric is ramping up. paul, thanks, as always. >> anytime. it's been five years since the crisis, so why despite countless new laws and regulations is another collapse possible? kate kelly joins us with that after we come back. clients are always learning more

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flying high. the fed expected to scale back the bond-buying stimulus program and we have plain old portfolio advice for you. are you taper-ready, or not? and should the wealthy give away their money to charity? or should they give their money away to people trying to start businesses? and companies? trying to star s businesses and companies, create jobs? which is better? halftime will be back after this short break. we gave people a sticker and had them show us. we learned a lot of us have known someone who's lived well into their 90s. and that's a great thing. but even though we're living longer, one thing that hasn't changed much is the official retirement age. ♪ the question is how do you make sure you have the money you need to enjoy all of these years. ♪

welcome back to the halftime report. safeway's moving higher after adopting a one-year poison pill.

it's designed to ward off a hostile takeover after the company became aware of an investor buying a significant amount of stock. the shareholders right plan will prevent any investor from owning 10% overall in the grosser. >> safeway, whole foods, kroger, who do we like? >> i like whole foods. listen, let's be candid here. i said last week take profits in safeway, fog more than a short interest squeeze so clearly i am wrong. it's not. >> i'm staying away from this space. >> john? >> appears to be a rerating of this name going on. i don't think it's the kind of thing you want to fight with. i think it's going higher, mid 30s to me. >> this week marks the five-year anniversary of the collapse of lehman brothers and start of the financial crisis. have banks done enough to reduce risks and curve leverage? kay kelly joins us live in new york with that story. kate? >> thanks so much. five years after the crisis it

would seem bank leverage has come down. bank leverage is the borrowed capital that allows parties to make transactions bigger than what their cash holdings would afford them. it was key issue that got banks into trouble in the first place. take a look at morgan stanley and goldman sachs. they changed from investment banks to bank holding companies during the crisis and lowered those numbers from 33 to 1 and 26 to 1 to the 12 to 1 range for are both of them today. citigroup, a bank holding company, has dropped its ratio from about 19 to 1 at the time to more like 10 to 1 now. banks say their balance sheets are more liquid, gotten rid of most of the toxic assets that led to bailouts and creating capital cushions for the rainy days. what are banks doing? they dabl in cds the derivative products that nearly took down aig, there's also been a huge surge in the use of credit including risky junk bonds in the last year or two. overall, lower leverage has

resulted in safer banks undoubtedly but also lower returns in many cases especially with the key roe metric. as a taxpayer, you're probably feeling happier, as an investor maybe not so much. >> i don't know. you have off balance sheet stuff going on, sandy weill was on this network what was it a week or so ago commenting on that and some of the things that are still in the system that need to be cleaned up. >> right. i think one issue is when you think about detivetirivatives w extremely popular today, a lot of times they actually don't show up on the balance sheet because when they're active before they're executed it may be sort of a net zero transaction. so you don't really see it when looking at the company's finances. but when there's an issue, a default, that's when it gets pretty serious. >> kate, thanks as always. >> thank you. >> quick break. final trades and winner of the debate when we come back. ♪

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welcome back. people have spoken and we have counted the votes and you said josh brown, the bear, won the debate on fedex. >> thank you very much. >> congratulations as well on your new firm. >> thank you, scott. >> big news. we're proud of you. let's do final trades. you're first. >> i would avoid fedex. do not buy into the earnings. >> simon baker? >> tdif, microsoft big dividend like this technology -- >> you didn't say tgif, it's only tuesday. >> tdif. >> communication equipment. i like the space, broadband being built out here whether siena, but the one name that's come down that i've talked about in the past, rut cuss, rkus. >> dr. j, what do you got? >> sky works systems, judge, swks. skyworks. >> a look at the three major averages before we head out here. best september in three years. we're also working on the best

first three quarters of the year since 1997. will it continue? what does the fed do tomorrow to taper or not to taper and by how much? those are the key questions i know you will be watching for. have a great rest of the day and see you on the other side. follow me on twitter and power starts now. >> halftime is over. "power lunch" and the second half of the trading day starts right now. >> indeed, it does. thank you very much. scott. microsoft making a very big move, a $40 billion stock buyback and a huge, and i mean huge, dividend increase. now that he's announced he's leaving is steve ballmer suddenly picking up the pace? boeing, set for takeoff momentarily. we're going to watch the latest version of the boeing 787 dash 9 take off in a few minutes and we will take you there to everette, washington, live. and this man, ben bernanke, before he makes his move, what should you do? this is p